How cultural fault lines undermined the attempt to build a new Infosys

How cultural fault lines undermined the attempt to build a new Infosys


On the surface, the recent upheaval at IT major Infosys was all about former CEO Vishal Sikka’s performance, a controversial acquisition and a founder not willing to go quietly into the sunset.

But there’s also a strong cultural angle that underpinned the conflict: Kannadiga, middle-class and humble versus Silicon Valley, aspirational and in-your-face.

“Infosys is no ordinary company. It represents a certain philosophy and value system in which hard work and frugality are seen as important virtues. Sikka was trying to change the company’s philosophy hence it is natural that the founders had to intervene,” said Narayan Bhat, a Bangalore-based chartered accountant who has watched the company grow from a small firm to multi-billion dollar enterprise.

Emotional undertones in a business conflict are not new to India Inc. The feud at the Tata Group last year, for example, was also seen as being against the core values espoused by the Parsi community, and resulted in the exit of Tata Sons Chairman Cyrus Mistry.

“The Ratan Tata camp had to step in because Cyrus was steering the group away from its core philosophy. History is again repeating itself but this time in Infosys,” said Uday Hegde, who runs a stock brokerage firm in Hubli, North Karnataka.

If anything, the unease at Infosys was more pronounced because unlike Mistry – a Parsi like all Tata Sons chairmen before him – Sikka was a northerner in a company that had decidedly southern Indian DNA.

The Infosys Board – since radically revamped — had cited founder NR Narayana Murthy’s “continuous assault” on Sikka as the reason he decided to quit on August 18. However, once Co-founder Nandan Nilekani came back to head the company as non-executive chairman of the Board, sentiment improved.

Murthy & Sikka: A clash of cultures

Infosys is one of the few companies which have an emotional connect with middle class households, particularly in Bangalore and elsewhere in Karnataka.

Raviraj Kumar, a stock broker from Bangalore said, “Infosys is the pride of Kannadigas. Several families have been transformed because their children joined Infosys soon after completing an engineering degree. In the world of technology a job with Infosys was once equivalent to securing a government job. Therefore, Narayana Murthy is seen as a hero for an entire generation and Vishal Sikka trying to undermine him is simply unacceptable.”

Employees who have been with the company for decades also saw Sikka as an “outsider,” who went against the core principles that Murthy espouses.

“Humility and simplicity are very integral to Kannadiga culture. Narayana Murthy might have been a billionaire but he led a very middle class lifestyle. And here comes Vishal Sikka who was using private jets and got himself a huge salary while cutting the salary of others,” says an employee who joined Infosys over a decade ago.

Stories of Murthy standing in food queues like any other employee, being cognizant of the needs of employees and being extremely accessible are well known. His grounded approach has also been an inspiration for many.

“Murthy sir taught us that we can become wealthy even if we didn’t come from a rich family. Hard work is all that matters. He believes that Infosys is not only a profit making machine but an institution to give back to society. That’s why we are proud to be associated with this company. Sikka doesn’t seem to fit into this idea,” added another employee who has been with Infosys for about two decades.

For long, Infosys shares were seen as a safe investment by small and retail shareholders. The company had captured the imagination of the professional class who began to dabble in the stock markets post liberalisation.

“The founders taking back control of the company will also assuage this section of investors, who see themselves as part of the Infosys family. With these changes, these investors will now remain committed to Infosys,” feels brokerage owner Hegde.

Outside Karnataka, a different story

But non-Kannadiga employees -– particularly the younger ones — have a very different take, underscoring the divide within.

“I have lot of respect for Vishal ji. He had a vision and was the person to change the company at time change was most needed,” said an employee based in Infosys’ Chandigarh campus who joined the group two years back, and was amongst the first group of people that underwent Sikka’s design thinking workshops.

A significant number of recent employees of Infosys – whom Moneycontrol got in touch with for this story- saw Sikka as a harbinger of change.

“Narayana Murthy knew dhandha (business). But he is old and his ideas won’t work. Vishal Sikka understands innovation and wants change, and this is his (Narayan Murthy) problem,” said another employee who joined the company in 2013.

In his tenure of three years, Sikka minced no words on the need to reinvent the company.

In this Economist piece, the author mentions a letter Sikka wrote to the employees, warning them that automation will eventually destroy the company if changes are not made at the right time.

Sikka was attempting to change the company’s fulcrum in a climate of falling growth and increasing protectionism in Donald Trump’s America.

“Vishal realised that if Infosys had to survive the next 20 years it had to move up the value chain. Low-end outsourcing work may have won the founders some loyal fans but it is not sufficient to make profits in the coming years,” adds Seema Gupta, a Gurgaon-based stock broker.

In the end, it is not about corporate values or governance, the issue that has been at the centre of the controversy surrounding Infosys these past few months. It is all about shareholder value.

“Bringing in Nandan is just a measure to catch share prices dropping further; it’s more of an emotional decision than a practical, long-term one,” said another Chandigarh-based employee.

As the tide turns, it is important to remember that in 2014, it was Vishal Sikka who was seen as the saviour, today, it is Nandan Nilekani


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